End of financial year

tax tips to think about before 31 March

It is almost the end of the financial year for most tax payers. Below is some tax tips to think about before 31 March comes around.

Write Off Bad Debts

Businesses with outstanding amounts owed, that are unlikely to be recovered in full should consider writing these off as bad debts. Bad debts can be used as a tax deduction , effectively reducing your taxable income for the relevant year if it has been documented that they are to be written off or if they have been dealt with in your computer system prior to year end.

Stock

A stocktake is required unless your stock is less than $10,000 and your turnover is less than $1.3m. Stock valuations are subject to detailed rules.

1.Standard valuation methods

1)      Cost: Any taxpayer can value their trading stock at the end of an income year at cost. They can use any reasonable methods as long as the figure representing the reality cost.

According to NZ International Accounting Standards, the cost of inventories includes all costs incurred in bringing the inventories to their present location and condition. They include import duties and other purchase taxes (do not include GST because it will be recovered subsequently); transport and handing costs (should be clearly related to inventories, otherwise it is a consumable aid); any other directly attributable costs of acquisition of finished goods, materials and services. Moreover, deductions and deferred discounts decrease the cost of inventories when received. 

2)      Replacement price (If used in the taxpayer’s financial statements)

Replacement price is the last available market value for acquiring the equivalent trading stock on the income year.

3)      Discounted selling price

Discounted selling price is the retail selling price minus the normal gross profit margin.  ‘Normal gross profit margin’ must be calculated annually for each department or category of goods.

4)      Market selling value (If lower than cost and the taxpayer has reasonable evidence to substantiate it): 

Market selling value is the amount expected to be received in the ordinary course of business from the sale of the trading stock, less: the estimated costs of completion and the expected cost of selling the trading stock.

Work In Progress

It is recommended that on 31 March you asses all the jobs in progress. Make a list of these jobs and add up the costs associated with these jobs (exclusive of GST). The costs will include any stock items used and employee/contractor time on these jobs.

These costs are treated as closing Work In Progress as at 31 March and are costs yet to be billed to the customers. These won’t be deductible as an expense at the end of the financial year.

Fixed Asset Schedule

We suggest reviewing your fixed asset schedule and assess whether any assets are no longer in use by the business, not working, stolen, or disposed of during the year. By writing off these assets (only if they meet the write off criteria) a deduction will be allowed with respect to those assets.

Bonuses and Holiday Pay

It is possible to claim amounts payable to your employees as a deduction for the current financial year, so long as the full amount is paid to the employee within 63 days of the balance date. Amounts that are paid more than 63 days from the balance date can only be claimed in the following financial year.

Pre-pay Expenses

By pre-paying for tax-deductible expenses before 31 March, you will be able to minimise you tax bill. Some categories of business expenses can be pre-paid without any limitations, meaning that you can claim as much as you like. Examples include stationery, vehicle registration, accounting and auditing fees, and postal charges. Most other expense categories have caps that limit the amount that can be claimed in a year.

TypeMonths$
StationeryNo limitNo limit
Subscriptions to newspapers, journals & other periodicalsNo limitNo limit
Postage and courier costsNo limitNo limit
RateNo limitNo limit
Road user chargesNo limitNo limit
Audit and accounting feesNo limitNo limit
Advertising  614,000
Consumable aidsNo limit58,000
Prepaid insurance premiums (where the total annual premium is less than $12,000)12No limit
Lease or bailment of livestock  623,000
Other services  612,000
Rent for land and buildings  626,000
Service or maintenance contracts (total annual cost less than $23,000)  3No limit
Subscriptions for trade professional associations (total annual subscription less than $6,000)12No limit
Telephone and other communication equipment  2No limit
Travel and accommodation expenses  614,000

In addition to the above there is also the Covid-19 tax relief measures to consider

There are some things you may not be used to thinking about when you prep for end of tax year:

  1. New rules to keep cash flowing – If money is a bit tight as the financial year draws to a close, here are four tax measures focused on providing and enabling cashflow that you might like to consider:
    • The tax loss carry-back rule, which means if you’re expecting a tax loss for the year ended 31 March 2021, you might be eligible for a refund of provisional tax previously paid for the 2020 year.
    • If your cashflow has been significantly impacted by the economic effects of COVID-19, you may be able to apply for relief from use of money interest and penalties, or enter into an instalment arrangement for payments due to Inland Revenue. Inland Revenue’s ability to remit use of money interest in such circumstances applies to tax payments due up until 25 March 2022.
    • Keeping an eye on tax losses, as the Government have announced plans to introduce a same or similar business test that allows tax losses to be carried forward. This will become useful if you’re wanting to raise capital for your business in the future.
    • Consider the Small Business Cashflow (Loan) Scheme being offered by the Government through Inland Revenue where certain conditions are met. This provides loans of up to $10,000 (dependent on the number of employees) with an interest rate of 3%, with no interest applying if the loan is repaid within 2 years.
  2. Asset threshold lowering – Put aside time to review your asset expenditure. Identify any assets (valued up to $5,000) that you need and buy them before 17 March 2021. This way, you’ll be able to claim an immediate deduction for these assets under the low-value asset write-off as the threshold drops from $5,000 to $1,000 on 17 March 2021. The temporary $5,000 threshold was a concession as a result of the COVID-19 relief measures introduced, and from the 17 March 2021 the $1,000 threshold is an increase from the $500 amount that was previously in place prior to 2020. It’s also a good time to ensure records are up to date on any commercial buildings as depreciation for tax purposes is available on commercial buildings for the year ended 31 March 2021.
  3. Earn over $180,000 a year? – If you’re one of the 75,000 Kiwis impacted by the new 39% tax rate, review your business and investment structure with us before 1 April 2021. The marginal tax change, rushed through last December to help pay for the COVID-19 recovery, applies to all employment income over $180,000 a year. It includes extra pay earned in the course of employment, such as bonuses, back pay, redundancy, and retirement payments. It is timely to consider such payments in relation to the 2021 year, as well as reviewing dividend payments.
  4. Keeping subsidy records crucial – While COVID-19 related wage and leave subsidies are non-taxable, keep accurate records of any subsidy you received and which staff member it was paid to, in case the Ministry of Social Development asks to review your records down the track.
  5. R&D loss tax credit – Start-up companies are able to cash-out their tax losses arising from eligible research and development (R&D) expenditure, and avoid carrying the losses through to the next income year. The credit can only be for:
    • eligible R&D business expenditure
    • up to 28% of your tax losses from R&D activity
    • companies that are tax residents in New Zealand
    • dates on or after 1 April 2015. The rules around R&D expenditure are detailed and eligible R&D expenditure will require approval from Inland Revenue. So if you’re looking to claim under these rules, you will need to start looking at this sooner rather than later, and keeping records of such expenditure as it occurs.
  6. Staff reimbursements and allowances – Make sure you have a good record of any reimbursements and allowances paid to employees for expenditures – generally and in account of new COVID-19 related Working from Home (WFM) tax changes. Remember:
    • For telecommunications devices and plans, staff reimbursements are tax exempt up to $5 per week. If reimbursement is above this amount, the exempt amount is 25% if the device or plan is used partly, 75% if used mainly, or 100% if used exclusively for employment purposes.
    • WFH payments claimed between 17 March and 17 September 2021 allow an additional $15 per week, per employee, to be exempt income for other WFH expenditure.
    • A tax-exempt payment for use of furniture or equipment when WFH to reimburse the depreciation of the item. The payment will typically be for the cost of the asset and the payment will still be deductible to the employer. Note the low-value asset threshold of $5,000 applying between 17 March 2020 to 17 March 2021 will apply here.

Documents required to prepare financial statements after year end

  • Closing bank statements to verify the closing balances
  • Loan statements for interest & principal payments
  • Hire Purchase agreements
  • List of people who owe you money (unless in computerised system)
  • List of people you owe money to (unless in computerised system)
  • Stock take
  • Vehicle log books
  • Interest & Dividend received documentation

We will send out our annual questionnaire/checklists which will detail everything else we need when we are ready for you to bring your information into the office.

Important IRD Changes Which May Impact You

The new top tax rate

A new top tax rate of 39% will apply on personal income in excess of $180,000 for the 2021-2022 and later tax years. For most taxpayers this begins on 1 April 2021.

We will monitor any taxpayers with this level of income as we may need to adjust your provisional tax payments throughout the year.

There are corresponding changes to other tax types to align with the 39% rate. These can be found in the table below.

Impacted AreaDetailNew rateFrom
Secondary tax codesA new tax code (SA) for secondary employment earnings for an employee whose total PAYE income payments are more than $180,000.39%1 April 2021
Extra paysFor extra pays for employees with taxable income exceeding $180,000.39%1 April 2021
Fringe benefit tax (FBT)A new top FBT rate will apply to all-inclusive pay exceeding $129,680.63.93%1 April 2021
Resident withholding tax (RWT)The Bill introduces a new RWT rate that mirrors the new top personal rate.39%1 October 2021
Employer superannuation contribution tax (ESCT)A new rate threshold will apply on superannuation contributions made for employees whose ESCT rate threshold amount exceeds $216,000. The ESCT rate threshold amount comprises an employee’s pay as well as gross employer contributions made in the preceding tax year. If the person was not an employee of the employer for the full preceding tax year, then it is an estimate of the employee’s pay and gross employer contributions for the tax year in which the contribution is made.39%2021-2022 and later income years
Retirement savings contribution tax (RSCT)A new 39% rate will apply on RSCT where a saver’s taxable income in either of the two previous income years exceeded $180,000. Certain eligible contributing entities are required to deduct RSCT from contributions made to approved retirement schemes for their shareholders or members.39%1 April 2021
Māori authority distributionThe standard rate remains unchanged at 17.5%. A taxable Māori authority distribution that is more than $200 where the Māori authority does not have a record of the IRD number of the member to whom the distribution will be subject to tax at a rate of 39% (currently the existing top rate of 33%).39%1 April 2021

Increased disclosure requirements for trusts

Trusts will be required to provide more information on their annual returns for the 2021-2022 income year onwards, including distributions and settlements made in the income year, profit and loss statements and balance sheets. This ensures Inland Revenue has a clear picture of how a trust is being used and whether usage changes as a result of the personal income tax rate change.

The commissioner can also request the information from trusts for prior years back to the 2013-2014 tax year as appropriate. This allows for comparable information to be gathered.

The increased disclosure requirements do not apply to nonactive trusts, charitable trusts and trusts eligible to be Maori authorities.

Minimum family tax credit

The annual rate minimum family tax credit (MFTC) threshold will increase from $27,768 to $29,432 for the 2020-2021 tax year and subsequent years which is a maximum of $32 per week extra. To get this payment customers must work for salary or wages and not be self-employed.

IRD began paying the higher rate in weekly or fortnightly payments from late December 2020 to customers who receive payments throughout the year. All MFTC customers will have any unpaid increase from 1 April 2020 included as part of their end of year square up. IRD will send a Notice of Assessment after the end of the tax year, around June/July 2021. That Notice of Assessment will indicate if the customer has an overall refund or bill once everything is taken into account.

The Small Business Cashflow Scheme changes

Applications will remain open until 31 December 2023.

The loan will now be interest free for 2 years (up from 1 year), and restrictions on how the loan can be used have eased. As well as spending on core operating costs, businesses will be able to choose to use the loan to invest into their business, helping it to adapt to the impact of COVID-19.

There are also changes to the eligibility criteria in the following 4 areas:

  1. When the business was established
  2. The decline in revenue test
  3. Employee number test
  4. Re-borrowing

The changes will be in effect from 28 January 2021. Note that the change in the decline in revenue test will significantly change which businesses are eligible as the time period will no longer include the April 2020 lock down. For more information visit the IRD website at ird.govt.nz/updates/news-folder/upcoming-changes-to-the-eligibility-criteria-for-the-small-business-cashflow-scheme

Discounted tax for your first year in business

If you’re new to business, you may be eligible for a discount for paying your income tax early. This applies to sole traders, contractors and partnerships.

In your first year of business, you don’t have to pay income tax until months after the tax year ends – usually 7 February of the following year, or 7 April if you have a tax agent.

This may mean you must pay income tax for your first year in business at the same time as paying provisional tax for your second year in business. We always work with our clients to make sure if it is the right situation for them that provisional tax is paid in the first year of trading.

You can choose to maker voluntary payments of tax during your first year of business to help spread the cost. If you make voluntary payments you may be able to get an early payment discount.

Early payment discount

You may be able to get an early payment discount of 6.7% if you:

  • are self employed or a partner in a partnership
  • have started a new business
  • get most of your income from the business
  • make a voluntary income tax payment before the end of the income year
  • elect to receive the discount before the income year’s tax return is due
  • do not have to pay provisional tax in the income year, or in the past 4 years
  • have not received an early payment discount, any self employed income, or any partnership income in the past 4 years.

Contact us if you think this may apply to you.

Newsletter – December 2020

Welcome to the end of 2020. We made it !!! 

The team at JMA want to take this opportunity to thank everyone for their support this year and to wish everyone a safe and happy holiday period, filled with fun, family and friends.

We are taking our break from 12pm on Wednesday the 23rd of December until 8:30am on Wednesday the 13th of January. Joanne, Anna and Wayne will still be available by phone or email if required.

Message from Inland Revenue 

We have received a message from IRD as follows:

” We’ll be sending text messages to myIR customers with low levels of debt on the 10th of December. This campaign will include clients of tax agents with 3 or less outstanding returns, so you may receive some contact from clients.

The amounts due will relate to any account type except student loans or child support, be over 60 days old and between $200 and $10,000. Customers who are inactive or have debt that is already under arrangement have been excluded from the campaign.

Customers will be asked to set up a payment plan by logging into myIR, or to call us on 0800 951-758 if they’d like us to assist them.”

For your information, the text to customers will read as follows:

“Hi IRD here. Need help to get on top of your tax bill? It’s easy to set up a repayment plan. Find out how at ird.govt.nz/instalments or call us on 0800 951-758”

If IRD contacts you please email the full details to us and we will review and respond appropriately, including letting you know whether you really do owe tax.

We would like to know the time and details of the sender.

If you don’t get a message then you can ignore this.

Mondayisation

This year, Boxing Day and the day after New Year’s Day fall on a Saturday and are ‘Mondayised’. How this affects employees depends on when they would normally work.

Some public holidays are attached to a specific day of the week, for example, Queen’s Birthday is always on a Monday. Other public holidays are attached to the calendar dates so the day they are celebrated on moves through the days of the week:

  • New Year’s Day (1st January)
  • The day after New Year’s Day (2nd January) 
  • Waitangi day (6th February)
  • ANZAC Day (25th April)
  • Christmas Day (25th December), and
  • Boxing Day (26th December). 

Mondayisation happens when an employee’s public holiday which falls on a Saturday or Sunday is moved to the following Monday (or in some cases Tuesday).

Mondayisation only happens if the employee doesn’t normally work on the calendar date of the holiday. If an employee normally works on the day of the public holiday’s calendar date then there is no Mondayisation for them and their public holiday benefits apply to the calendar date. For example if they normally work on a Saturday and are working on Boxing Day or the 2nd of January then that is the day their time and a half applies to, not the Monday if they also work that day. 

Annual Closedown 

If an employer regularly closes down for a holiday period or seasonal break and requires employees to take annual holidays (or take unpaid time off) this is referred to as an ‘annual closedown’.

This often happens at Christmas time, but some seasonal industries have closedowns at the end of a particular season. An employer can close down different parts of the workplace at different times but must give employees 14 days notice before closing.

Employees who are entitled to annual holidays at the time of closedown

If an employee is entitled to annual holidays, even if they currently have a zero annual holidays balance, they must stop work and take as much of their annual holidays balance as is needed to cover the closedown period. Payment for these annual holidays is calculated in the usual way that payment for annual holidays is calculated.

If the employee doesn’t have a high enough annual holidays entitlement balance to cover the whole closedown period, then:

  • in addition to taking all of the annual holidays entitlement they currently do have, they can also take some annual holidays in advance (if the employer agrees), and/or
  •  they may have to take some leave without pay (or another form of leave as agreed with their employer).

Employees who are not entitled to annual holidays at the time of closedown

Some employees may not be entitled to annual holidays at the start of the closedown because:

  • they haven’t worked continuously for their employer for 12 months yet, or
  • they have worked for  their employer for 12 months but haven’t reached entitlement for annual holidays because they have taken  unpaid leave of more than one week and this has moved out their anniversary date for annual holidays entitlement, or
  • they have had a period of receiving pay for annual holidays on a pay-as-you-go basis.

There are special provisions for these employees as follows:

  • they must get paid 8% of their gross earnings as at the closedown date from:
  • the start of their employment if they haven’t worked continuously for 12 months for their employer, or
  • their last anniversary date for annual holidays if they have already worked for their employer for at least 12 month, less any amount already paid as 8% pay as you go or already taken as annual holidays in advance,
  • in addition:
  • the employee may agree with their employer that they take some annual holidays in advance
  • the employee’s anniversary date for annual holiday entitlement purposes is moved to the date the closedown starts (or in some situations, an alternative date close by as nominated by the employer).

Holidays and Leave – Just a Reminder of Employees Entitlements

All employees working in New Zealand are legally covered by the Holidays Act (2003). The Act requires that:

  • as an employer, you keep accurate records for all employees of the hours worked each day in a pay period and the pay for those hours, and leave accrued, entitled leave and leave taken.
  • all employees can take annual leave (depending how long they’ve worked for you).
  • all employees are given sick leave and bereavement leave
  • all employees get paid leave on public holidays, if they would normally work on that day.

Annual Leave

All employees are entitled to at least four weeks of paid annual holidays. This doesn’t include public holidays or sick leave.

Paying Employees for Leave

With the right systems in place, you shouldn’t have too much trouble working out what to pay your employees when they take leave. It’s important to:

  • Keep all wage and time records and holiday and leave records up-to-date and accurate.
  • Understand what your employees are entitled to — especially those who work irregular or part-time hours.
  • Get your calculations right, (use Employment New Zealand’s Holiday tool).

Public Holidays

When a public holiday falls on a day your employee would usually work, they’re entitled to a paid day off, no matter how long they’ve been working for you. If they agree to work anyway, you must:

  • pay them at least time and a half.
  • give them another paid day off later (a day in lieu).

Sick Leave

Once they’ve worked for you for six months, employees are entitled to at least five days paid sick leave each year. You must also:

  • carry over unused sick leave into the next year. The maximum accumulation is 20 days — although you can provide more if you want to.
  • allow employees to use sick leave to care for a sick or injured spouse, partner, dependent child or any other dependent individual.
  • pay employees what they’d usually earn for the days they’re on sick leave.

Bereavement Leave

Once they’ve worked for you for six months, employees are entitled to paid bereavement leave of:

  • three days if their partner, parent, child, sibling, grandparent, grandchild, or their partner’s parent dies.
  • one day on the death of a person outside their immediate family (if you accept that your employee has suffered a bereavement).

They’re allowed to take their bereavement leave at any time and for any reason that relates to the death.

Domestic Violence Leave

Once they have worked for you for six months, employees affected by domestic abuse can take up to 10 days’ paid domestic violence leave.

To qualify, at least one of these situations must apply to your employee:

  • They have experienced domestic violence.
  •  They live with a child who has experienced domestic abuse — even if the child only lives with them sometimes.

Like sick leave, the domestic leave entitlement renews every 12 months. Employees cannot carry over unused days.

You do not have to pay unused days if the employee leaves.

Parental Leave

Employees may be entitled to 26 weeks of government-funded parental leave payments. Employees who’ve worked for you for six months (for an average of at least 10 hours a week) are also entitled to take up to 26 weeks of unpaid parental leave.

They can take up to 12 months if they’ve worked for at least 10 hours a week for a year or more. Workers who have worked for you for less than six months may also be entitled to parental leave, in certain situations.

Unpaid Leave

Employees can apply for unpaid leave for any reason — but it’s totally up to you whether or not to agree to it.

If you let an employee take unpaid leave of more than a week throughout the year, you’ll need to consider how it will affect their annual leave entitlements and payment calculations.

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Changes to Small Business Cashflow (Loan) Scheme

The Government has announced some changes to the Small Business Cashflow (Loan) Scheme.

  • No interest will be charged if the loan is repaid within 2 years. Currently, it is 1 year.
  • Restrictions on how the loan can be used have eased. As well as spending on core operating costs, businesses will be able to choose to use the loan to invest in their business, helping it to adapt to the impact of Covid-19.

Also, applications for the loan can now be made until 31 December 2023, an extension of 3 years.

Law change: Privacy Act

The Privacy Act aims to keep people’s personal information safe and secure. The law updates reflect changes in technology and the ways business is done online and offline.

From the 1st of December 2020, there are a few changes to the Privacy Act, meaning businesses must:

  • not destroy personal information if someone asks for information held about them
  • report serious privacy breaches
  • check personal information shared with overseas companies will have similar protection to New Zealand.

Overseas businesses operating in New Zealand must meet privacy requirements, including multi-nationals offering services like cloud software or social media.

The revamped Act gives the Privacy Commissioner greater powers. This includes:

  • ordering a business to give a person their personal information
  • issuing a compliance notice if a business fails to comply with the Privacy Act.

So, it’s a good idea to appoint a privacy officer, eg adding privacy duties to a trusted employee’s existing role.

If you have any questions or need any more information, please get in touch with us.

From the team at JMA, see you all in 2021.

Xero Tips and Tricks – How to Use Find and Match to Reconcile a Bank Statement Line

You can use find & match to find an invoice, bill or account transaction already entered and reconcile it with the relevant bank statement line on the web and on your mobile phone.

  • Web

– In the Accounting menu, select Bank accounts.

– Click Reconcile xx items for the bank account you want to reconcile

– For the relevant bank statement line, click Find & Match.

– Find the transaction, then select the checkbox next to it. To help you find the transaction, click the column heading to change the transaction order, or search by name, invoice number, amount, reference or cheque number.

– Click Reconcile

  • iOS

-From your dashboard, tap a bank account with unreconciled transactions (indicated by an orange dot).

-Find the statement line to reconcile (swipe up or down to see different lines).

-Under Make a match tap Find.

-Find the Xero transactions that match the statement line. You can swipe up or down, or search for specific transactions.

-Tap the matching transactions to select them.

-Once the amounts equal, tap Done to reconcile.

  • Android

-From your dashboard, tap a bank account with unreconciled transactions (indicated by an orange dot).

-Find the statement line to reconcile (swipe up or down to see different lines).

-Under No match found tap Find match

-Find the Xero transactions that match the statement line. You can swipe up or down, or search for specific transactions.

-Tap the matching transactions to select them.

-Once the amounts equal, tap the checkmark to reconcile.

The Trusts Act 2019 – How Will it Impact You?

Trusts are common in NZ and the reasons for setting them up vary. The Trusts Act 2019 comes into effect on 30 January 2021. Changes to the act aim to make trusts more accessible. There are increased compliance obligations on trustees and duties that ensure greater transparency for beneficiaries.

The changes to the act include:

  • The age of majority (the default age that a person can inherit if not specified) changes from 20 to 18.
  • The maximum duration period of a trust is extended from 80 years to 125 years
  • Obligations on trustees to keep certain information about trusts
  • A mechanism to request the court to review the decisions and actions of trustees
  • Flexible powers for trustees to manage trusts.

Trustee duties

Trustees must be aware of their obligations and duties under the law. These are set out in the Trusts Act 2019. There are mandatory duties that are essentially to ensure trustees take their role seriously. These are:

  • A trustee must know the terms of the trust
  • A trustee must follow the terms of the trust
  • A trustee must act honestly, and in good faith
  • A trustee must act for the beneficiaries of the trust
  • A trustee must exercise the powers they have for a proper purpose.

Optional duties for trustees – The act sets out optional duties that can be changed in the trust deed. If this happens, the advisor must point this out to the settlors.

Duties regarding information keeping and sharing – These duties are regarding the information trustees must keep, and the information that must be made available to beneficiaries (including of trust assets, trustee decisions, and changes to the trust).

From January the trustees are required by law to share information about the trust with beneficiaries. You should make sure the group of beneficiaries comprise only those who it is intended will actually benefit from the trust.

The additional compliance duties for trustees within the act may mean that existing trusts are no longer cost effective. Greater transparency may also require trustees to disclose information that they previously did not share.

It may be time to review the reason you set up your trust. To make an informed decision about what is right for you and your trust, you should consider having a discussion with your lawyer or us. 

From January next year,  the work, and therefore the cost of maintaining a trust will increase and if you only have the family home in the trust, the cost could outweigh the benefits of having a trust.

Get in touch with us to discuss how the changes may impact you.

Savings: Tips and Tricks

When it comes to saving money, every little bit counts. So the sooner you start saving, the sooner you’ll reach your financial goals. Here are a few tips & tricks to help you on your way.

  • Set savings goals to help you focus

It can be hard when you’ve got nothing to aim for, so set some goals for the future (both short and long term) to help you focus and keep you motivated. Short term goals may be saving for a car or holiday, while long term goals may be saving for a house deposit or retirement.

  • Make saving automatic

It’s easier to save when you don’t have to think about it. So set up an automatic payment that goes into your savings account every pay-day and pay yourself first.

  • Pay your bills on time

You can save money just by paying your bill on time. Simply set up an automatic payment (for regular payment amounts) or direct debit (for irregular amounts) and your bills will be paid automatically every time on the due date.

  • Avoid impulse buying

Avoiding impulse purchases is one of the first steps to good money management. It’s easy to make a purchase without thinking too much about it, but taking a little extra time is always a good idea. Its good to wait 30 days before you spend on unnecessary items. After a month has passed your urge to splurge may have already passed as well, and you’ll have saved money just by waiting.

  • Cancel memberships and subscriptions

Do you have a gym membership or magazine subscription? If you’re not using that membership or subscription to its full potential, it may be a good idea to cancel it or find a cheaper plan that better suits you.

  • Make healthy choices to help you save

Quitting smoking, avoiding takeaways or passing on that morning flat white could be healthy for both you and your bank account. Seeing your savings go up like this can also help motivate you to stick to your health goals. Its a win-win for you.

  • Never give up!

Saving money can take a lot of will power, sacrifice and focus. But once you get the hang of it, it becomes easier and in the future you’ll be thankful you started saving when you did.

Why Use Xero? The Benefits of Cloud Accounting.

Xero offers your business a simple, yet powerful, way to manage all your finances in the cloud.

With Xero as your core finance system, you get real control over every element of running your business, from basic bookkeeping right through to efficient online invoicing, live bank feeds and detailed financial reporting.

Helping you run your business

Xero is also a fully functioning business platform, with an open architecture that lets you plug in online payment solutions, time-tracking apps or job-management tools. So whatever sector you’re in, there’s a range of apps to customise your Xero system.

With Xero as your cloud platform you get:

  • A mobile way to check your numbers 24/7 – with online access from any device
  • A paper-free office environment – with secure storage of your documents in the cloud
  • An all-in-one cloud platform – with a host of features, apps and third-party solutions
  • Increase the time to get paid and imporve your cashflow – The faster the process, the faster you get paid.
  • Colloboration with your advisor – we can collaborate on a single set of data, saving time and reducing errors

Talk to us about switching to Xero

If you want an accounting system that’s also a highly flexible business platform for running your company in the cloud, come and talk to us about switching to Xero.

Spring Cleaning your Business

Tips for Spring Cleaning your business - Her Drum

As we come to an end of the first month of spring, here are some ideas for spring cleaning.

Spring is a time for renewed energy and clearing out the clutter with a little spring cleaning. This doesn’t just relate to houses. Business owners can also take advantage of this wonderful time of year to get organised and make improvements by spring cleaning their business. Here is few tips to help you spring clean your business.

Review Your Goals

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Spring is a good time to dust off and evaluate your progress. Do the goals you made at the beginning of the year still feel relevant to you? Have new opportunities arisen that might be more meaningful to you now? You should also be reviewing how much you got done in the past few months- was it more or less than what you expected? Update each goal on your list with three, clear action steps and give yourself a deadline to get them done.

Review Your Marketing Strategies & Update Social Media Profiles

Social media networks face $78 million fines for hateful posts in Germany |  Stuff.co.nz

Review your marketing strategies to work out which are most effective. Is your marketing budget being spent in the right areas.

Review social media profiles and website to ensure that everything is up to date, accurate, and wherever possible, secure as it can be. Old posts and irrelevant information can be removed and any new contact information and physical addresses can be updated.

Review Your Business Plan

How To Create A Business Plan

Often, small business owners “set it and forget it” when it comes to their business plan. In reality, you should spend some time revisiting your plan at least once a year and updating it to keep pace with your company. Going back to the basic foundation you built your small business on will always be beneficial.

Clear Out Your Work Area

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A clean, clear work area is a key element of productivity. If you’ve got a desk full of paperwork, you’re severely impacting your productivity. Take everything off your desk, wipe away the grime, clean your computer screen, get rid of all the random business cards and receipts that you’ve hoarded over the past few months, and add some plants or fresh spring flowers. Using Google Drive or Dropbox to organise soft copies of everything you need, instead of using hard copies.

Review Cash Balances

New Reserve Bank figures show that despite plunging interest rates Kiwis  put the most money away in term deposits last month for a year |  interest.co.nz

Whether you have revenue coming in or not, bills must still be paid. This is why it is important to review your cash balances.

Examine Automation of Business Processes

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Take a closer look at all aspects of your business bookkeeping to customer support and manufacturing to marketing. Wherever the automation of the work can be done, have a look at software and/or hardware to streamline operations, and free up time and resources.

Reorganise Systems

A practical approach to systems and processes - Bay of Plenty Business News

Do your systems and processes need reorganising? Are the processes you put in place when you started still applicable for the size of the business now? Could they be improved? Often when a business is started it is done with some basic processes. As the business grows these processes may need to be reviewed and refined as they may not be appropriate.

Study Use Of Time

The Ultimate Guide to Time Management at the Office

Begin by having the team do a deeper level of hour tracking. This reveals where the team spends its time and will expose inefficiencies. With solid data, you can analyze and make decisions on platforms or processes that will have a much wider business impact.

Take a Look at Staffing

Your staff are your brand - Waikato Business News

Identifying the roles and responsibilities of every team member on board and ascertain whether downsizing is an option, or cross-training is a better strategy. This will improve revenue, one way or another.

Happy Spring Cleaning!!!

If you need any help with any of these please contact one of our team here at JMA.

Keeping your Cashflow Strong in Tough Times

We are living in uncertain times right now. The situation changes daily with new challenges to overcome. Small businesses are particularly vulnerable in tough economic times like this.

When sales are slow, there are still overheads and salaries that need to be sorted. Pre-planning and being proactive can help you weather tighter economic periods and other planned expenses that will need to be accounted for.

Here is a few tips to follow in order to minimise the stress of cashflow:

  • Invoice Early

Send any invoices that you can during the month, rather than just at the end. Perhaps consider whether you have any regular clients or customers that you could offer a retainer or similar deal to if they book services or make purchases from you in advance.

  • Chase Payments

Use this opportunity to chase up any outstanding payments. Strong communication and relationships with clients & customers matter, so talk to them and chase up invoices.

  • Talk to Suppliers

A little honesty can go a long way. Perhaps they can extend a line of credit for your payments to them, In most cases, a good supplier would rather offer a little flexibility to keep an ongoing business relationship.

  • Review your Costs

Conducting a general review of expenses is also a good idea. Business costs can creep up, and it’s a great idea to make time to check on your expenses regularly, no matter what your financial situation. Review all of your regular payments and subscriptions as well as upcoming costs.

  • Talk to the bank or Tax Department

If cashflow is tight, make sure you have conversations with your bank early so you have everything in place to see you through. It is also important to talk to IRD as soon as you know you might have trouble meeting your tax obligations.

If your cashflow is keeping you awake at night, contact us and we can help sort through some strategies for your business.

Working for Families Tax Credit Changes

Family, Education and Well-being

From today, the in-work tax credit (IWTC) is available to eligible families who are not receiving an income-tested benefit or student allowance and have some income from paid work each week. This change removes the requirement for working families to work a minimum number of hours.

Previously sole parents must have worked a minimum of 20 hours per week, and couples a minimum of 30 hours pr week between them, in order to be eligible for the IWTC payment.

If your family already receives IWTC payments, you don’t need to do anything- continue to keep your family income and circumstances up to date and you’ll keep receiving the IWTC.

If your family is already receiving Working for Families payments and is now entitled to the IWTC, you also don’t need to do anything. IRD will pay the IWTC automatically- you’ll receive a notice soon showing how much you’ll get and when the payment will be made.

For families not currently receiving Working for Families payments, including the IWTC, you can check if you’re eligible and can apply on the IRD website.

https://www.ird.govt.nz/in-work?fbclid=IwAR19s5tojODyjieV7IDj7CC5RZ0J_U9cjXy52wzvdKIrLBVzejfLtJQ4lKw